The Indian agricultural sector, a lifeline for most of the population, faces significant challenges requiring innovative solutions. The sector contributes roughly 14% of the country’s GDP and desperately needs strategies to thrive. Farmers, the backbone of this sector and crucial to the nation’s economy, should receive reasonable prices for their farm produce. They are dissatisfied with the prices realized by selling to different agencies and must know the prices in other markets. Therefore, they eagerly anticipate introducing new technologies for farming, extension, processingand marketing agricultural produce.
The essential components for developing agriculture towards Viksit Bharat@2047, a vision for a developed India by 2047, include diversification from crops towards high-value commodities and improved market access through Farmers’ Producers Organizations (FPOs). Modernizing agricultural systems is crucial for the development of ‘Viksit Bharat.’ Access to modern technologies and profitable markets will help farmers receive fair prices and higher profits, reducing their exploitation by intermediaries and commission agents and ultimately leading to a more prosperous and sustainable agricultural sector.
Promoting alternative marketing systems like Farmer Producers Organizations (FPOs) is crucial to modernizing agricultural marketing and supporting small farmers. Producer Companies are legal entities established to enhance farmers’ living standards, status, income and profitability
(Vahoniya et al., 2022). FPOs help small farmers by providing services covering farm cultivation, inputs, technical services for processingand marketing. They empower farmers to address various issues, improve living standardsand increase profitability. The government recognizes the potential of FPOs and affirms that they are the most appropriate institutional form for farmers to mobilize and build their capacity to leverage their production and marketing strength. Farmers’ Producer Organizations (FPOs) are crucial for mobilizing individual farmers, improving market accessand reducing inefficiencies in agriculture supply chains. To ensure their sustainability, it is essential to build the right technical skillsets and business acumen within FPOs (Fig 1; Table 1).
Due to inadequate infrastructure in the study area, most farmers prefer local rural markets instead of traveling to specialized markets or nearby towns (
Khan and khan, 2012). Improvement in the farmer’s status is possible only through the diversification of crops from low value to high value and the commercialization of all agricultural activities in the district. This can be done through the adaptation of sustainable farming practices, institutional changesand implementation reforms in state agrarian policy, the effective use of inputs, training for farmersand the participation of NGOs in agriculture. Instead of abandoning farming, we propose that farmers in India could effectively adopt low-input farming techniques and direct marketing strategies, such as farmers’ markets and community-supported agriculture, similar to those used in the US
(Kumar et al., 2011).
A researcher has collected secondary data to obtain information about FPOs operating in the region and the challenges faced by farmers while using the FPO model. The researcher has found that no one has studied farmers’ challenges while using the FPO model to market their farm produce. Hence, the researcher has attempted to examine farmers’ various challenges when using these FPO models to market their farm produce.
Farmer Producer Organizations (FPOs) effectively link small farmers to the external world, providing benefits like improved market access. Farmer Producer Organizations (FPOs) effectively link small farmers to the external world, providing benefits like improved market access, reduced transaction costs, economies of scale, better quality and price realization for the produce
(Nikam et al., 2019). Small and marginal farmers join FPOs to enhance their access to credit, storage, output and input markets and their bargaining power. Households associated with FPOs have higher incomes, consumption and investment levels and a lower incidence of indebtedness (
Singha and Vattab, 2019). The findings of
Gurung et al., 2023 confirmed that FPO membership positively and significantly impacts net returns, return on investment and profit margin.
Nihtya and Vaishnovi (2022) and
Jayashree et al., (2023) identified various constraints facing Farmer Producer Organizations (FPOs), including lack of finance, government price policy, awareness of credit facilities, connection with financial organizations, market information, lack of initiatives among FPO members, processing facilities, infrastructural constraintsand crop insurance facilities. Maharashtra is a leading state organizing small and marginal farmers through farmer-producer companies. However, it has been observed that farmers are still getting low prices for good quality farm produce. In contrast, the intermediaries take a significant share of the money paid by the consumer.
Navneetham et al., (2017) focused on the credit support needed by Farmers’ Producer Organizations (FPOs) and the importance of teaching farmers management practices and marketing skills.
Venkattakumar et al. (2017) highlighted the need for producer companies to focus on performance indicators, financial management and mobilizing members for sustainable growth.
Sawairam, (2015) emphasized the role of farmers’ producer organizations and producers’ companies in helping small and marginal farmers participate in emerging agricultural markets. The government should promote the FPOs as a policy intervention to sustain their members
(Ameer et al., 2021).
The formation of FPOs is expected to address the many challenges individual small and marginal farmers face, especially in marketing the produce. There has been a variety of research on challenges faced by FPOs in India. However, the literature review shows that no study in India has focused on the challenges faced by farmers participating in farmer’s producer organizations.
Objectives of the study
1. To study FPO as a non-conventional model of agricultural marketing.
2. To find out why farmers are not participating in FPO activities.
3. To find out the expectations of farmers and FPO from the Government for marketing agricultural commodities.
Research design
The present study is exploratory. Exploratory research involves talking with others who may have more information about what you would like to learn. It helps to gain a better understanding of an issue. The researcher has used a combination of primary and secondary research. Primary research involves collecting data through interviews, surveys and feedback. Work was carried out at the MIMA Institute of Management, Pune, in 2024.
The researcher utilized both primary and secondary sources to gather information.
Primary source of data
Primary data is first-hand data collected freshly by the researcher using a questionnaire to collect information from respondents. It is often used to gather data about variables like awareness, perception, expectations, preferences, effectiveness and behavior from a large population.
Population
The research study focuses on existing agricultural marketing channels in the Pune district, involving all male and female farmers from various socio-economic backgrounds. The researcher used a multi-stage sampling technique to select samples and personally visited villages in the Pune district to interview farmers.
Selection of sample
The study covered eleven talukas in the Pune district. Seven villages from each taluka were randomly selectedand 15 farmers were interviewed using the snowball technique. One thousand one hundred fifty-five farmers were interviewedand 1034 appropriate responses were received. Twenty-five Farmer-Producer Companies were randomly selected from the Pune district.
Sample size
The formula for calculating sample size by proportion (n=z^2*p*q/e^2) can be used when the population is infinite with a 95% confidence level and 50% precision, resulting in a sample size 385. Additionally, 1155 farmers were interviewed for qualitative resultsand representatives of 25 farmer-producer companies were surveyed for an overview of their present status and the challenges they face. The reliability of the questionnaire for farmers was tested using Cronbach’s Alpha.
Statistical tools used
Descriptive statistics used in this study included frequencies, percentagesand ranking. Tools were selected based on the research work’s objectives and the respondents’ nature. Statistical analysis was conducted using the “Statistical Package for the Social Sciences (SPSS)” version 17.0. The Z-score test was utilized to test the study’s hypothesis. The data analysis and interpretation process thoroughly used appropriate statistical techniques and the researcher determined significant results.
Utility of the study
The Farmer Producer Company is nascentand the future of Indian agriculture depends on strengthening these as the best alternative for providing end-to-end services to the farming community, emphasizing small and marginal farmers. The study has revealed various areas for improvement of Farmer Producer Organizations, which will help policymakers take appropriate steps.
Farmers study
Farmers selected as a sample for opinion on various marketing models are young adults with an average age of 42 years. Their education is at the secondary school level to graduation (49%) and illiterate is only 15%. On average, he owns a land of 5.2 acres.
Table 2 shows that the farmers are unsatisfied with the price realized by selling to different agencies. Five hundred twenty-six farmers said they were unsatisfied with the price.
Table 3 shows that the farmers face the problem of ‘Necessary Market Information’ mostly (79.7%); followed by problems of ‘Existence of Middle-men’ (73%); ‘Access to New Technology’ (62.9%); ‘Lack of Storage Facility’ (61.2 %); ‘Competition’ (58%); ‘Transportation’ (56.7%); ‘Lack of Grading’ (53.5%); ‘Lack of Institutional Finance’ (44.2%); ‘Problems of Produce Collection’ (27.5%); ‘Distress Sale’ (21.3%) and lastly ‘Weight and Measures’ (19.2%).
Table 4 illustrates that the highest percentage of...respondents answered ‘No’; 91.2% of farmers are unaware of Farmers Producer Company, while only 8.8 % are aware of F.P.C.
Table 5 shows that the main reason farmers are not members of Farmer Producer Company is the ‘Lack of penetration of the FPO concept among farmers’; another important reason is the ‘Lack of working capital support.’
Table 6 shows that very few responses to this question were used to decide the response rank. 6.8 % of farmers said facilitating (collective) production activities is the main benefit.
Study of FPO (25 FPO)
Table 7 shows that only 8% of the respondents reported running FPO successfully, while 92% faced different challenges.
Table 8 shows that all FPOs (100 %) face the challenge of lack of financial support for running FPOs successfully; they are facing the main challenge of obtaining financial support. According to them, handholding support is essential for at least five years to develop FPO, but it is only given for three years (96%). More is needed. Another critical challenge followed by a lack of market information (92%), lack of strengthening, capacity building of farmer producer organization (88%) and lack of suitable infrastructure facilities for scientific storage of commodities (84%).
Table 9 shows that farmers expect the Government to help them by ‘Ensuring that farmers receive marketing information promptly (89.2% farmers), Followed by ‘Formulating suitable agricultural price policy’ (65.6 % farmers); ‘Provision for standardization and grading of the produce’ (63.4% farmers); ‘Provision for extending the adequate amount of Credit facilities’ (50.3% farmers ); ‘Early procurement by Govt. before growers are compelled to sell to traders’ (42.9% farmers); ‘Improvement and extension of road and transportation facilities’ (40% farmers); ‘Extension and construction of additional storage and warehousing facilities.(37.9%farmers); ‘Establishment of regulated markets’ (29.5%); then ‘Improvement in condition of mandis’ (29.4% farmers).
Findings and suggestions
Knowledge of farmers producer company, benefits and challenges farmers face
The study revealed that farmers will benefit from non-conventional marketing methods. The best method of marketing agricultural produce is forming a farmer-producer company and marketing through it. This method’s main benefits are the facilitation of collective production activities and collective and direct marketing. Become a member of the Farmer Producer Company to get market information.
Farmer Producer Company is a means to bring together small and marginal farmers to build their business enterprise, which professionals will manage. FPO can help farmers produce various agricultural products and market crops. Farmer Producer Company (FPO) can help farmers successfully deal with multiple challenges that small producers face today. Initially, FPOs were organized under the co-operative structure. Initially, they were supported by the Government, but government support has declined over the yearsand new producer companies have started with regulatory frameworks similar to those of companies. However, the study revealed that most farmers need to be made aware of the benefits of the Farmers Producer Company. Only a few know about itand they are members of the FPO.
The study revealed that most farmers are not members of the Farmers Producer Company. The researcher was interested in knowing the reason for this and through this study, the researcher came to understand that the lack of penetration of the FPO concept among farmers is the main reason for this. Farmers are unaware of FPO, how to form itand how to run it successfully; another important reason is the lack of working capital support. They need governance and management capabilitiesand there needs to be more commitment from member farmers.
Challenges faced by farmer producer organizations
The researcher was interested in knowing about Farmer Producer Companies registered in the Pune district. The researcher interviewed office bearers of 25 FPOs in the Pune district to determine whether they are running FPOs successfully or facing any challenges. It has been revealed from the study that only 2 FPOs said that they were running it successfully without any obstacles. Most of the FPOs are facing various challenges. The main challenge is to have more financial support to run an FPO successfully. FPOs face the main challenge of obtaining financial support from banks and other financial institutions. According to them, handholding support is essential for at least five years to develop FPO, but it is given for three years, which needs improvement. Lack of strength and capacity building of farmer-producer organizations is also an essential challenge, followed by a lack of suitable infrastructure facilities for the scientific storage of commodities.
The Farmers Producer Company also expressed a direct link with the industrial houses so that farmers could directly sell farm produce to various companies at pre-agreed prices. NABARD, ATMAand the Director of agriculture should try to develop linkages with FPO and industry so that farmers can directly sell their farm produce.
